The number of people paying taxes is India is not low, if we consider the number of people who are not eligible to pay taxes, according to Samir Arora.
The founder and fund manager at Helios Capital tweeted this in response to Omkara Capital's founder Varinder Bansal's post.
Expanding on this point, Arora wrote in a later tweet that "people who have to pay under current rules are more or less already there".
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Bansal quoted data from the Indus Valley Annual Report 2024, prepared by Blume, which stated that only 1.5 percent of Indians (of 22 million) pay India's income tax in its entirety. The report commented on the central government stepping in to drive investments in capital formation and stated that India's tax collection growth has not been buoyant enough to support its ambitious capex investments.
Retweeting Bansal's post, Arora added his own perspective.
He wrote:
"That is not a small number:
A) farming income is tax-free
B) there is less participation of women in the workforce
C) India has higher younger population and children
D) in India, the income tax bracket starts above average income per head. In other countries, GDP/capita is much higher than the first level at which u have to pay income tax- unless u want that
E) there is a higher disparity in income- 80 crore people got free ration so u don't expect most of them to pay income tax.
All in all number of people paying taxes is not low in India if you look at the above factors."
When people suggested that farming income be taxed to better this situation, Arora responded by saying that it would not result in much of an improvement.
He wrote, "In pure percentage terms I don't think many people will be added to tax paying group if farming income was taxable. Percentage of young and women and the fact that our tax bracket itself starts above GDP per capita are more significant."
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When one of the comments pointed out how street vendors don't pay taxes even though they earn enough to buy multiple flats, Arora pointed out the loophole they must be using.
"They can show that the wife is the director of marketing and the father is responsible for finance and pay each of them 5 lacs salary. Therefore look at several people in the house and then calculate income," he wrote.
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